Unanswered Questions About Microsoft's New Cloud Service "Azure" (MSFT)

As expected, Microsoft (MSFT) announced its new cloud computing service today at the Professional Developers Conference. Now we even have a name: "Azure."

Like Amazon's (AMZN) EC2, Azure will allow developers to code applications within Microsoft's cloud, promising greater reliability and scalability than traditional data centers. Redmond makes a point to note "Azure is an open platform that will support both Microsoft and non-Microsoft languages and environments."

Here's what we don't know: Pricing, uptime, and potential profitability.

Microsoft is debuting Azure as a "pre-release" product. Pricing remains unknown and and no service level has been established. The big question on pricing is whether Microsoft will offer comparable terms as Amazon, market Azure as a more upscale product with higher cost/reliability promises, or go downscale (the later seems unlikely). We expect it will be priced as a competitor to Amazon.

And will Azure help Microsoft make the transition from desktop to cloud computing? Also not clear, especially in terms of profit. Amazon's services business is still immaterial to its overall P&L, and Microsoft is a lot bigger than Amazon. It also remains to be seen whether Amazon, Microsoft, or anyone else can ever corner the cloud-development platform market, the way Microsoft did on the desktop. It's possible that, in the long run, cloud computing might not a huge money-maker for anyone. Tim O'Reilly:

If cloud computing is a commodity business, then the outsize profits...are not going to be there. This is a business that will be huge, but it may be more similar to the web hosting and ISP markets, which are also huge, but not hugely profitable.